Declining Bitcoin Open Interest on CME Suggests More Pain for BTC Price: Bitfinex

Bitcoin (BTC) has continued its downtrend, hitting new local lows below $59,000. During the half-hour of Monday’s US trading session, BTC briefly fell below $60,000 to hit a new local low of $58,500.

This decline has continued as exits from the US spot Bitcoin exchange-traded fund (ETF) market have continued into the new week.

The latest weekly report from crypto exchange Bitfinex revealed that local US Bitcoin ETFs lost more than $100 million each trading day last week, amounting to $544.1 million in outflows · electives Analysts at the trading floor said the outflows are a combination of weak-handed ETF investors reacting to short-term negative news and core/funding arbitrage loosened due to rates negative financing.

Bitcoin open interest declines

According to Bitfinex, one of the signs of the relaxation of basis/funding arbitrage is the sharp drop in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) and other trading platforms.

Open interest on the CME fell by $220 million last week, with aggregate total open interest on other platforms falling by more than $450 million over the same time period. The drop has seen total open interest in Bitcoin futures drop from a June 7 record high of $36.99 billion to $33.3 billion.

“This reduction in OI is consistent with the negative funding rates seen on several exchanges over the past week and corresponds with net ETF outflows, suggesting a substantial unwinding of funding arbitrage trades tied to the ETF flows With this in mind, it is important to recognize that not all ETF outflows should be interpreted as outright selling,” the analysts said.

Bitcoin could be near its bottom

Citing the latest Bitfinex Alpha report, analysts predicted that BTC could be near its bottom, as strong ETF outflows like the ones seen are often correlated with local bottoms forming.

When BTC fell below $70,000 in early June, local US Bitcoin ETFs posted seven consecutive days of net outflows, highlighting the effect of sharp price moves on ETF investor sentiment.

“This pattern is critical for investors to monitor as it often provides clues to potential reversals or stabilization points in the market,” the analysts noted.

Meanwhile, Bitfinex analysts have warned that market sentiment remains bearish as there is weakness in the lower timeframe (one-minute to 15-minute charts) among crypto assets.

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